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The new regulator will consider competition in the sector. “We need to know if the sector is as open as it should be to new entrants to the market and whether consumers are getting the best possible deal,” said Wheatley.

“The largest payment systems are owned and managed by the big banks, but concerns have been raised that the sector lacks transparency and innovation,” said the FCA. “It also needs to be easier for challenger banks to access these systems and compete with the bigger players.”

The Banking Reform Act (2013) created a new independent regulator for payment systems as a subsidiary of the FCA. The new regulator will be operational in April 2015 to promote competition, innovation and ensure that payment systems operate in the interests of their users.

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There are a number of payment systems in use in the UK. HM Treasury will consult on which payment systems will be overseen by the new regulator later this year.

Chris Skinner, chairman of the Financial Services Club, said this is an attempt to give consumers direct access to payment systems without having to use banks.

“There are already lots of non-bank payments systems out there, but they cannot do things as easily as they would like,” added Skinner.

With banks currently suffering IT glitches and a negative public perception, some in the industry believe they could soon face competition in other lines of business, such as current accounts from other sectors.

Reputation could drive improvements as customers gradually move away if a bank becomes known for poor IT and reliability.

“I dropped RBS/NatWest Bankline, for example, as it was expensive and offline a few days most weeks. It looked like 1970s technology when it actually ran and was horrible to use,” said one IT-savvy consumer.

Consumers today use web-based services, which are trusted and have good IT, every day. If services such as PayPal, eBay, Amazon, Facebook and Twitter moved into banking, they would attract customers. Their systems already contain details about people and businesses and handle transactions and money.

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